Blog post #2: Dealing with sea change. Does public sector has enough arms in its quiver?

Submitted by Nuria on Mon, 2016-08-01 10:42

The Climate action summit recently took place in Washington on 5-6 May. Remarking on the urgency to deal with climate change, World Bank Group President Jim Yong Kim commented: “We have no time to waste. Delay is not an option. We have to wake up once again from the fog of success”.

Society has undergone a metamorphosis from a stable and safe entity to a dynamic and vulnerable one. It is confronted with seismic changes in terms of shrinking labour force, acute climate change, resource constraints, influx of refugees, ageing population and unemployment. According to the EU: Over 5 million young people (under 25) were unemployed in the EU-28 area in the second quarter of 2014 .

Such seismic changes pose outright threats to the society. For all such changes, unsurprisingly the buck often stops with the public sector. On one hand, governments are faced with pressing demands from various sections of society such as businesses and citizens. Not only this, it is expected to respond to these challenges by introducing adequate measures and innovative solutions. Governments, on the other hand, are also exposed to unprecedented challenges such as budgetary constraints and changing public expectations. They are often too locked into their silos, hierarchy and bureaucracy challenges to devise appropriate new solutions. We may ask then, how could the public sector respond to this new wave of challenges and unmet needs? The SONNETS team is delving into this aspect and aims to identify the emerging and most pressing needs of the society that the public sector could address.

Our discussions with citizens, business representatives, civil servants and industry experts generated some valuable insights and we note the following:

Rebalancing focus on emerging needs vs pressing needs: Even though it is good to have a long term vision of the emerging yet unfulfilled needs, we need to acknowledge that certain existential needs have become more challenging to deal with. For example, job security is a need that finds its manifestation in the second level of Maslow need hierarchy. Surprisingly today, unemployment challenge still looms large over Europe.

Crowd-based capitalism: Resource slump cycles and shortages have led to new form of business models that allow for efficient use of resources. A lot of economic activity is shifting to getting goods services from individuals mediated by peer-to-peer communities (such as Airbnb, Couchsurfing, BlaBla Car and Ola). The resources are no longer owned by large institutions but are co-owned by peer to peer decentralized communities. These initiatives increase the impact of deployment of capital (such as putting to use spare bedrooms and cars) and create greater variety and consumption.

Public sector: the lead innovator or a Schumpeterian innovator?: What role should the public sector take on to actively deal with these societal challenges? The public sector could be a lead innovator in introducing innovation through technologies and the supporting solution. Conversely, the public sector could be a Schumpeterian innovator, one that introduces investment strategies, regulatory measures, public procurement and other initiatives that create markets for the private sector and fosters innovation in this sector.

Technology, the silver bullet?: Although there is no denial that technologies provide ample opportunities to innovate, they are not a silver bullet. This is crucial considering the budgetary pressures, public sector faces today. At any given point in time there are a set of key future technologies where the private sector cannot be as active as would be desirable since the costs of deployment are too high. Even if the innovative technologies are deployed, such innovations do require some capabilities and skills on the part of users to absorb these innovations.

This blogpost is the second one in a series of blogs to follow. Stay tuned for the next ones!!!